Show me the mon­ey: the con­se­quences of fail­ing to dis­close assets in fam­i­ly law proceedings

Par­ties to finan­cial fam­i­ly law cas­es have an ongo­ing duty to dis­close the mate­r­i­al facts relat­ing to their finan­cial posi­tion. This prin­ci­ple was stat­ed in In the mar­riage of Briese, where the court said that ​“a per­son … has a pos­i­tive oblig­a­tion to set out at an ear­ly stage [their] finan­cial posi­tion in a clear and com­pre­hen­sive man­ner.” The court went on to acknowl­edge that ​“the need for each par­ty to under­stand the finan­cial posi­tion of the oth­er par­ty is at the very heart of cas­es con­cern­ing prop­er­ty and maintenance.”

Oblig­a­tion to dis­close in the Fam­i­ly Law Rules and Fed­er­al Cir­cuit Court Rules

The oblig­a­tion is also set out by rule 13.04 of the Fam­i­ly Law Rules, which says that a par­ty to finan­cial pro­ceed­ings needs to make full and frank dis­clo­sure of their finan­cial circumstances.

For pro­ceed­ings in the Fed­er­al Cir­cuit Court of Aus­tralia, there is a sim­i­lar pro­vi­sion found in rule 24.03 of the Fed­er­al Cir­cuit Court Rules, which pro­vides that a par­ty to finan­cial pro­ceed­ings must file a finan­cial state­ment or affi­davit of finan­cial cir­cum­stances pro­vid­ing full and frank dis­clo­sure of that par­ty’s finan­cial circumstances. 

What you need to dis­close in rela­tion to your finances

These rules mean that you will need to dis­close any infor­ma­tion rel­e­vant to your finan­cial posi­tion including:

• any inter­est you have in any prop­er­ty
• any income you receive from your employ­ment or busi­ness interests
• any inter­est in a trust, as an appointor, trustee or ben­e­fi­cia­ry or if you are a share­hold­er or direc­tor of a cor­po­ra­tion which is the ben­e­fi­cia­ry of a trust
• any inter­est in a cor­po­ra­tion
• any gift you have made or prop­er­ty you have dis­posed of since separation 
• any finan­cial resources eg inter­est in a deceased estate, inter­est in a fam­i­ly trust as a dis­cre­tionary ben­e­fi­cia­ry, enti­tle­ment to a pension

Con­se­quences if you do not disclose

In Weir & Weir, the Full Court of the Fam­i­ly Court stated:

where there is clear evi­dence of non-dis­clo­sure …the Court should not be undu­ly cau­tious about mak­ing find­ings in favour of the oth­er party.

Non-dis­clo­sure will work against a par­ty where it has meant that the court is not able to accu­rate­ly deter­mine that par­ty’s income and expen­di­ture. This occurred in Black & Kell­ner, where the par­ties’ assets could not be ful­ly deter­mined because of obvi­ous non-dis­clo­sures by the husband. 

The oblig­a­tion to dis­close aris­es even where the asset pool is small for exam­ple, in Water­man & Water­man, the wife appealed prop­er­ty orders on the basis of sup­pres­sion of evi­dence where the hus­band did not make ade­quate finan­cial dis­clo­sure. The court held that the duty dis­close is not ​“trun­cat­ed” just because the asset pool is ​“quite modest”.

Dis­clo­sure is cen­tral to finan­cial mat­ters which come before the Fam­i­ly Court and the Fed­er­al Cir­cuit Court of Aus­tralia. It is not enough to send finan­cial doc­u­ments piece­meal to your for­mer part­ner. You must pro­vide infor­ma­tion and, if request­ed, expla­na­tion about your finan­cial posi­tion to allow an under­stand­ing of your assets and liabilities. 

The oblig­a­tion to dis­close con­tin­ues through­out the pro­ceed­ings. It is impor­tant that par­ties take these respon­si­bil­i­ties seri­ous­ly. Fail­ure to dis­close can result in a divi­sion of assets which is unfavourable to the par­ty who has not dis­closed appropriately.

If court pro­ceed­ings have been finalised and it is dis­cov­ered that a par­ty to the pro­ceed­ings did not dis­close their true asset posi­tion, there may be grounds for the court to set aside the pre­vi­ous prop­er­ty orders and make new orders based on the true finan­cial position.